Target Corp.’s “Perfect Storm”

A political contribution spawns weeks of headlines (and a flash mob)

The big news for Target Corp. this summer might have been the unveiling, after a “decade of wooing, of its first Manhattan store, in East Harlem. But just weeks after that grand opening (Jerry Seinfeld! Doug E Fresh! The National Double Dutch League!), the Minnesota-based, hip-on-the-cheap retailer was in the news again, this time defending and fending off and apologizing and taking heat and struggling and being haunted and in the crosshairs. Over the course of 10 days in August, per Brandweek’s consumer perception index, buzzy Target “lost one-third of its buzz score.”

A summary of what transpired – a “stumble,” an “imbroglio,” “heartburn for public relations”— from a Washington Postpiece in August:

When Target gave money in July to a pro-business group in Minnesota, the company thought it was helping its bottom line by backing candidates in its home state who support lower taxes. Instead, the retailer has found itself in a fight with liberal and gay rights groups that has escalated into calls for a nationwide boycott and protests at the company’s headquarters and stores.

The problem: Target’s $100,000 helped pay for TV ads supporting the gubernatorial campaign of Republican state Rep. Tom Emmer, who thinks Minnesota’s corporate taxes should be lower. As it turns out, he also wants to ban same-sex marriage.

It was an embarrassing stumble for a company that has carefully cultivated an image of urbanity and hipness — and that’s earned goodwill with the gay community. The company offers benefits to domestic partners and receives sterling marks from liberal groups for its tolerance of gays. Target has even been an annual sponsor of the Twin Cities Gay Pride Festival.

The imbroglio illustrates the pitfalls facing companies after a game-changing Supreme Court decision in January allowing them to contribute unlimited money for political activities — often with complete anonymity. But corporate donations can still come to light and, when they do, cause unexpected heartburn for public relations.

Here was NPR’s Peter Overby (whose reports are always well worth a listen/read) on August 16:

During this election season, there’s likely to be a lot more corporate cash in politics, following a Supreme Court ruling last winter that lifted restraints on companies and labor unions.

Already, a case involving Target Corp. and the gay-rights movement has provided one picture of how American politics works in the wake of the Citizens United decision.

Target gave $150,000 to an independent group, which spent some of it on an ad supporting Republican Tom Emmer’s bid to be Minnesota’s next governor. Target regarded Emmer as pro-business. But as a state legislator, he also built a solid record opposing gay equality…

So protesters beat a path to Target stores…

… in one case, a “flash mob,” er, danced through a Seattle-area Target store singing a repurposed version of Depeche Mode’s 1984 hit, People Are People: “Target ain’t people so why should it be/Allowed to play around with our democracy?/I can’t understand what makes Tar-zhay/Think they’ll get away/Gonna make them pay!”

But Target is “people,” per the Supreme Court’s January Citizens Unitedruling, and can therefore dip as deep as it likes into company coffers to fund ads supporting or opposing political candidates. And so the company gave $100,000 (plus $50,000 of branding help) on July 6 to MN Forward, an independent expenditure group formed in June with a mission of electing “pro-business” candidates in Minnesota. “It’s unclear,” the Postreported, “whether Target knew that…MN Forward would be required under state law to disclose its contributors or that it would support Emmer as a candidate.”

On July 13, MN Forward and similar groups filed finance reports with the state disclosure board, and localcoverage of the filings noted, in passing, Target’s contribution — along with similar donations to MN Forward from Polaris Industries, Hubbard Broadcasting and Davisco Food International. A few days later, MN Forward unveiled its pro-Emmer TV ad, and it became clear what Target’s cash was actually helping to pay for. Objections were raised by Target employees, and OutFront Minnesota, a gay-rights advocacy group, joined by the Human Rights Campaign and then MoveOn.org, which organized a boycott and petition drive, all of which led to Target defending and fending off and apologizing, as mentioned at the top of this piece, and to ongoing, wider press coverage (the Wall Street Journal, multiple stories from the LA Times, MSNBC’s Keith Olbermann, and assorted newspaper editorials including from the (Minneapolis) Star Tribune and the New York Times).

The takeaway, per many of these accounts, was that Target’s experience offered a lesson for other politically-inclined companies —or, as Businessweekput it, “a cautionary tale for other corporations about taking sides in political campaigns.”

Target “has become,” in the (Minneapolis) Star Tribune’s words, “something of a poster child for the perils of corporations making political contributions.” The Target “flap,” per the Wall Street Journal,” “shows the potential downside for companies that want to get more involved in politics” – for “brand-oriented companies, in particular.” The Washington Postquoted the vice president of policy at the Center for Competitive Politics calling this “a sort of an object lesson for the next time a Sears or a Wal-Mart thinks about getting involved in some political expenditures,” since “large corporations are not generally interested in alienating customers.”

Target’s headache illustrates the potential risks for businesses that seek to take advantage of a recent U.S. Supreme Court ruling that threw out parts of a 63-year-old law that prohibited campaign donations from company funds. The ruling changed regulations in about half the states, but the Target donation in Minnesota is among the first major new corporate moves to come to light.

Which hints — the first— at the answer to this question, posed and then answered by the St. Paul Pioneer Press:

A dozen Minnesota companies have sent corporate money into this year’s political campaign, from Securian Financial to Polaris Industries to Davisco Foods.

So why is everyone focusing on Target Corp.?

The question arises because Target finds itself alone in the center of the storm. To its critics, there are both logical and emotional reasons why Target has become the poster child in a nationwide controversy after it gave corporate cash to a group backing Tom Emmer, the Republican candidate for governor with a record of opposing gay rights.

The logical reasons, they say, include Target being Minnesota’s first corporate donor, Target being the largest donor ($150,000) and Target being the biggest company.

But the reasons are emotional, too, touching on Target’s deep connection to consumers, even more so than for electronic retailer Best Buy — a corporate contributor that gave the same group $100,000….

One has to be cautious when reading too much into the example of Target. In many ways it was a perfect storm for a controversy.

Malloy was also quoted in the LA Times suggesting that what companies might take from Target-Gate is not don’t make political contributions but rather don’t do it the way Target did.

Though some corporate executives and activists think the Target case may be a cautionary tale for businesses, Tara Malloy of the Washington-based Campaign Legal Center believes it will not necessarily hinder businesses from pouring money into campaigns.

Energy companies and defense contractors that have less interaction with the public won’t be subject to the same kind of pressure as retailers.

Besides, she said, “the Target case may just be an example of a corporation doing it wrong.” Other donors may take pains to make their contributions anonymous, she said.

Given all these different ways that you can spend your money without generating a national news story, certainly I think a lot of corporate executives are saying this is just a reminder to use all those other tools that we have in our tool kit…

…adding, Call me! (Not really).

The lesson, in other words: When using company money to make political donations, be sure to do so in a way that does not also make headlines. It turns out, it could get easier for Target and other Minnesota-based companies to do just that: supporters of gubernatorial candidate Tom Emmer filed a motion in U.S. District Court to overturn the state disclosure requirement that brought Target’s contribution to light.

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